Introducing: AliExpress and OrderMetrics.io

Introducing: AliExpress and OrderMetrics.io

We are excited to announce our new integration with AliExpress which allows Shopify merchants who utilize dropshipping to automatically pull in product and shipping costs for each of their orders and import this data into OrderMetrics.io. This data is then combined with Shopify order data, Facebook Ads, Google Adwords, and transaction fees to show merchants a realtime view of their profitability. Additionally – for the first time ever – this integration helps merchants discover their most and least profitable Facebook Ad campaigns with little to no manual effort.

How to get started:

Step 1) Install OrderMetrics.io, start your 21-day free trial, and make sure you are logged in.

Step 2) Install our Google Chrome Extension

Step 3) Head over to your AliExpress admin/order page and log in

Step 4) On your AliExpress dashboard click “Sync all orders”

Step 5) Return to app.ordermetrics.io and refresh the page

Success! You should now see all of your product and shipping costs automatically imported into OrderMetrics.

We would love to hear what you think about this feature. Please reach us at Hello@OrderMetrics.io

Note – this feature is currently available on our Growth and Advanced plans. If you are an existing customer on a lower plan, you must upgrade to one of these plans to access this feature.

 

 

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Different Methods to Calculate COGS for eCommerce

While it’s important for all businesses to know their numbers, eCommerce retailers face the added challenge of easy comparison shopping and stiff price competition. Because this can mean operating on razor-thin margins, it’s important to be able to track every cent in costs so that you can maintain profitability.

Four Methods for Calculating Cost of Goods Sold

There are four general methods for calculating costs of goods sold.

Weighted-Average Method

The weighted-average method uses the average cost of all of your units and inventory. Unlike the other methods, it considers your inventory as a pool and doesn’t track specific units or make assumptions about which unit sold first. The costs are weighted by the number of units.

Consider the following inventory purchases.

  • 100 units at $7/each.
  • 50 units at $8/each.
  • 150 units at $7.50/each.

Your total inventory would be $1,865 (100 x $7 + 50 x $8 + 150 x $7.50). Your weighted-average cost per unit would be the total inventory ($1,865) divided by the total number of units (300). Rounded to the nearest cent, that’s $6.22 per unit.

To find the weighted-average COGS, multiply the units sold by the average cost. If you sold 100 units, your weighted-average COGS is $622.

Best for: Keeping things simple when you have mass-produced, interchangeable items. Examples include off-the-rack clothing, nails, and water bottles. Order Metrics uses this method.

Specific Identification Method

The specific identification method tracks each individual item of inventory. If unit A cost you $7, unit B cost $8, and unit C cost $7.50, and you sell unit B, your cost of goods sold on that order is $8.

Best for: High-value, unique, or customized items that you need to identify individually. Examples include cars, antiques, and build-to-order computers.

First-In, First-Out (FIFO)

With mass-produced and/or non-unique items, inventory is considered as a pool rather than as individual items. Continuing the above example, you’d have a total inventory of $22.50 ($7 + $8 + $7.50).

With FIFO, the first unit you bought is considered the first unit you sold even though an employee filling the order may have actually grabbed a different unit. Assume that you bought units A, B, and C in order and then had two orders for one unit each.

Under FIFO, your COGS for the first order is $7 because you bought unit A first. Your COGS for the second order is $8 because unit B is the next unit you bought. Your total COGS for that period would be $15 — the sum of the COGS for each order.

You can also calculate COGS in aggregate. If you bought 100 unit A, then 100 unit B, then 100 unit C, and sold 150 units, you can find the FIFO COGS by adding up the cost of the first 150 units you bought. That would result in $1100 (100 unit A x $7/unit + 50 unit B x $8/unit).

Best for: Pooled items similar to the weighted-average method. FIFO most closely matches your ending inventory on your balance sheet to your current costs.

Last-In, First-Out (LIFO)

LIFO is the reverse of FIFO. Instead of assuming that you sold your oldest inventory first, you assume that you sold your newest inventory first.

Assuming you still bought one each of units A, B, and C, your initial inventory would remain $22.50.

In the two orders for one unit each example, your LIFO COGS for the first order would be $7.50 because you bought unit C last. Your COGS for the second order would be $8 because unit B was the last unit you bought before unit C. Your total COGS for the period would be $15.50.

Now let’s change the larger volume example so that you still bought 100 of each unit but sold 250. To calculate LIFO COGS, you start with the last purchase and work backwards. To cover the 250 units in sales, you’d need 100 of unit C, then 100 of unit B, then 50 of unit A. Your LIFO COGS would be 100 unit C x $7.50 + 100 unit B x $8 + 50 unit A x $7 for a total of $1,900.

Best for: Pooled items similar to the weighted-average method. LIFO most closely matches your COGS to your current costs even if you don’t sell all of your inventory. When your costs are rising, LIFO results in a higher reported COGS on your income statement and therefore lower taxable income.

What’s Included in COGS?

To determine what to include in COGS, it’s important to remember that COGS stands for costs of goods sold. COGS is the value of the goods, or inventory, that you ship.

COGS and inventory value should include the purchase price you paid plus any related ordering costs such as handling fees or freight costs to your warehouse. In short, your cost of inventory is whatever it takes to get the inventory in your hands. When you sell inventory, the cost of that inventory is added to COGS.

What About Other Costs?

eCommerce retailers also have numerous other costs such as shipping to customers, order fulfillment, payment processing fees (e.g. Shopify Payments, PayPal or Stripe), marketplace transaction fees (e.g. eBay or Amazon), and online advertising (e.g., Facebook or Google). There are also more traditional costs such as employee salaries, electricity bills, and rent for a warehouse.

It’s important to understand all of these costs, and they can generally be used to reduce your taxable income. However, they are not traditionally included within COGS because COGS measures the acquisition cost of the items that you sell.

Order Metrics tracks both COGS and other costs within a single tool. You can view a beautiful dashboard to track the total costs and profitability of individual products, advertising campaigns, shipping methods, orders, order combinations, and more. To learn more, watch our video or start your 21-day free trial.

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Navigating Shopify’s Complex Payment Processing Fee Structure

Navigating Shopify’s Complex Payment Processing Fee Structure

For ecommerce stores looking to make the switch from platforms such as Magento or Woocommerce to Shopify, one of the most important things to take into consideration is Shopify’s complex transaction fee structure. Additionally, for shops already on Shopify, it is crucial to understand your transaction fees and find ways to reduce these costs.

This guide will walk you through Shopify’s transaction fees for both Shopify Payments (Shopify’s internal payment processing system) and external payment gateways such as PayPal, Braintree, or Authorize.net.

Understanding Shopify Payments

Unlike many other ecommerce platforms, Shopify offers their own payment system to merchants located in the USA, Canada, UK, Ireland and Australia. For folks based in these countries, Shopify Payments offers a convenient solution with little to no approval process, allowing you to start accepting payments immediately. Payment processing fees for Shopify payments vary based on which Shopify plan you are on. Additionally, each eligible country has their own fee structure.

You can see Shopify’s payment fees categorized by country in the tables below:

USA:

USA Fixed Fee USA % USA In-Person % External Payment Gateway
Advanced Shopify – $299 / month $0.30 2.40% 2.40% 0.50%
Shopify – $79 / month $0.30 2.60% 2.50% 1.00%
Basic Shopify – $29 / month $0.30 2.90% 2.70% 2.00%
Shopify Plus -Negotiable Negotiable

Canada:

CA Fixed Fee CA Domestic Online % CA Intl*/Amex Online % CA In-person % External Payment Gateway
Advanced Shopify – $299 / month $0.30 2.40% 3.30% 2.40% 0.50%
Shopify – $79 / month $0.30 2.70% 3.40% 2.60% 1.00%
Basic Shopify – $29 / month $0.30 2.90% 3.50% 2.70% 2.00%
Shopify Plus -Negotiable Negotiable

*The Intl fee column is applied when a customer’s credit card is located from a country outside of Canada

Australia:

AU Fixed Fee AU Domestic Online % AU Intl*/Amex Online % External Payment Gateway
Advanced Shopify – $299 / month $0.30 1.40% 2.70% 0.50%
Shopify – $79 / month $0.30 1.60% 2.80% 1.00%
Basic Shopify – $29 / month $0.30 1.75% 2.90% 2.00%
Shopify Plus -Negotiable Negotiable

*The Intl fee column is applied when a customer’s credit card is located from a country outside of Australia
United Kingdom:

UK Fixed Fee UK Online % UK In-Person % External Payment Gateway
Advanced Shopify – $299 / month £0.20 1.60% 1.60% 0.50%
Shopify – $79 / month £0.20 1.90% 2.20% 1.00%
Basic Shopify – $29 / month £0.20 2.20% 2.70% 2.00%
Shopify Plus -Negotiable Negotiable

Ireland:

Ireland Online Fixed Fee* Ireland Online %* Ireland In-Person %* External Payment Gateway
Advanced Shopify – $299 / month £0.25 1.60% 1.60% 0.50%
Shopify – $79 / month £0.25 1.90% 2.20% 1.00%
Basic Shopify – $29 / month £0.25 2.20% 2.70% 2.00%
Shopify Plus -Negotiable Negotiable

* Ireland must include 23% VAT

You may have noticed a field in the right column called “External Gateway Shopify Fee”. This is an additional fee – charged by Shopify – for using an external payment gateway such as PayPal for a given transaction. For example, if you are on the Basic Shopify plan and PayPal is used for a transaction on your Shopify store, you would be charged PayPal’s fee (typically 2.9% + $0.30) + Shopify’s Basic plan external gateway fee of 1%, for a total of 3.9% + $0.30 for that transaction.

Keeping track of transaction fees

Keeping track these fees can be very tricky, especially if you use multiple payment gateways. Fortunately, we have built a feature within our Shopify app, Order Metrics, which tracks your transaction fees on a per order basis and supports multi payment gateway usage.

Order Metrics calculates total transaction fees for your Shopify store

View transaction fee totals over a specified date range

Order Metrics calculates transaction fees for each order

View transaction fees for each order based off which payment gateway was used

Transaction fees can vary by payment gateway

Enter custom processing rates for each payment gateway in Order Metrics

For more details visit www.ordermetrics.io or apps.shopify.com/order-metrics-profit-analytics

Tips to reduce transaction fees

  1. If you are an international company where Shopify Payments is not available, try incorporating through Stripe Atlas to create a US entity so you can use Shopify Payments, thus reducing the additional payment gateway fee. *Note that we have not attempted this so there no guarantees that it will work. Please let us know if this has worked for you.
  2. Use a service like Kash which lets customers pay with their bank account instead of credit card. Transactions made with bank accounts have significantly less fees than credit card transactions
  3. Negotiate. The larger plan you are on, the more power you have to negotiate with Shopify and other payment providers. If your transaction volume is high enough, you may want to consider increasing your Shopify plan size to get a lower processing rate.

Order Metrics is the best way to monitor and improve your ecommerce store’s profitability. We offer a 14-day free trial and very reasonable pricing. Start your free trial today on the Shopify app store – apps.shopify.com/order-metrics-profit-analytics

 

Posted by hello@ordermetrics.io in OrderMetrics.io

Top 3 Reporting Apps every Shopify Store Must Have

Setting up analytics for your Shopify store can be a daunting task. However, the Shopify app marketplace has enabled store’s of all sizes to access enterprise level analytics that help store owners and employees to make data-driven decisions without needing a technical background. Here are our top 3 picks for must have reporting/analytics apps for Shopify stores.

1) Lucky Orange – Record visitors of your site and see where they get stuck

 

 

It can be frustrating to know that customers are visiting your site and maybe even adding products to their cart but end up leaving without making a purchase. Lucky Orange is a Shopify app that helps you discover why your customers are leaving withut making a purchase. They do this by capturing a video recording of each visitor interacting with your website. Watching a recording of your visitors helps you discover where they get stuck, confused, or turned off by pricing.

In addition to video recordings, they offer vistor surveys, heatmaps and live chat, however we have only tested out their video recording feature.

The Lucky Orange Shopify app is affordable, comes with a free 7-day trial, and it’s a no-brainer to give it a try.

2) Order Metrics – Monitor and improve your store’s profitability


Staying on top of your costs is an essential task to run a successful ecommerce store and unfortunately Shopify does not offer proper reporting tools to manage your store’s costs or profit. Fortunately, OrderMetrics.io has created an excellent app that helps you analyze your store’s profitability at the product and order level. It sits somewhere between an ERP and an accounting system – giving you a detailed view of where your store is and is not making profit.

As veteran store owners have likely experienced, it can be difficult to keep track of your Cost of Goods, discounts/promotions, shipping costs, and Facebook/Google Adwords spend when the data is scattered across multiple channels. Order Metrics combines this data into a single dashboard that shows overall profitability in real time. This makes Order Metrics it an extremely useful tool for store’s who want to spend less time organizing data and more time making improvements and finding new customers.

Order Metrics comes with a 14-day free trial and requires very little setup to get started.

Disclosure: The writers of this post, own and operate Order Metrics

3) Semantics3 Analytics – Track customer behavior data 

Semantics3 is a great supplement to Shopify Advanced Reports. The analytics tool helps you discover insights into individual customers, segments of customers, and cart abandonment.

The app organizes customer data to show their behavior on your website, purchase history, total revenue, and more.

Additionally, you can see cart abandonment data by product which can be useful to see which products are commonly being added to a customer’s cart, but not making a completed purchase

Semantics3 Analytics comes with a 7-day free trial 

 

Posted by hello@ordermetrics.io
Why COGS is all wrong for your Shopify store

Why COGS is all wrong for your Shopify store


Traditional brick and mortar retail merchants have the luxury of being able to set the selling price for a product, know the product’s cost of goods, and then calculate their profitability for each sale with relative certainty – minus any discounts or promotions.

Ecommerce stores on the other hand face an additional challenge when calculating a sale’s profitability – shipping costs. Shipping costs are highly variable due to factors such as distance, package weight and dimensions, fuel costs, priority, and how your Fedex rep woke up feeling that morning. OK, joking about the last one. With all this variability, how on earth do you include shipping costs in your cost of goods (COGS) calculation? Well our answer is that most ecommerce businesses simply cannot. To get an accurate picture of how much profit an ecommerce business makes on each sale, they must figure out their cost of each order which takes an order’s shipping cost into consideration. Let’s call this Cost of Order.

To calculate Cost of Order, we need two things – the sum of an order’s line item (or product) costs and the shipping cost of an order. Product costs can be calculated using various COGS methods while shipping costs must be retrieved from shipping software such as ShipStation or your carrier’s bill.

OrderMetrics.io shows your profitability on a per-order basis and includes shipping costs.

We run OrderMetrics.io, the only Shopify app that combines your real shipping costs, cost of goods, and order revenue to analyze profit on a per order basis. Our app saves merchants hours each month combining the data needed to monitor their store’s profitability.

Order Metrics integrates directly with your shipping provider and automatically associates each order with it’s shipping cost. Then, our app combines this data with your product’s cost of goods to calculate your profit on a per-order basis. Our customers have told us that by using our app, they have reduced the amount of time they spend inserting order data into Excel and have gained better visibility about their orders and profitability. We have heard stories where shops have discovered popular order combinations with unusually high shipping costs, gone back and changed the shipping method for those shipments, and reduced their shipping costs by 15% or more.

Analyzing profitability metrics on a detailed level can be extremely valuable to find pricing discrepancies, excess shipping costs, and how discounts affect profitability. Our Shopify app is currently the only software that automatically associates your orders with their real shipping costs and view your profitability on a per-order basis. Our customers have found this is the best way to measure their store’s profitability.

Order Metrics has a 14-day free trial and takes minutes to get setup. We currently integrate with ShipStation, Shippo, and Shipwire. For stores using other shipping services or 3PL warehouses, we provide an easy-to-use interface to upload your shipping costs. Integrations for Facebook Ads and Google Adwords are coming soon.

You can install our app from the Shopify app store.

Posted by Hank Kronick in OrderMetrics.io
How to reduce your shipping bill by 15% or more (Part 1)

How to reduce your shipping bill by 15% or more (Part 1)

This exclusive guide for Shopify stores provides tips to reduce shipping costs and maximize order profitability.

Disclosure – we run OrderMetrics.io, a software service (and Shopify app) which monitors your ecommerce orders to maximize profitability by combining order revenue, product data, cost of goods, and actual shipment costs. Each ecommerce business is unique and tactics to optimize profitability vary. Please shoot us an email for specific recommendations for your business.

Find order combinations that are eating at your profit margin

If you are reading this guide, you may have a general idea of what your gross profit margin is and possibly how much it fluctuates month to month. However, promotions, shipping changes, and order behavior can all influence fluctuations in order profitability. If you haven’t analyzed these variable fluctuations at a deeper level, it is almost certain that you can improve your gross profit margin. This is especially true for ecommerce companies as they often deal with thousands (or millions!) of individual orders and shipments each month.

If you are not data-inclined…do not fear! Our Shopify app makes it easy to identify trends to improve order profitability without being a data scientist. We hate to watch shops flush money down the toilet and are on a mission to help reduce costs and increase profitability. In fact, we guarantee we can help improve your gross profit margin with at least 2x ROI of the cost of our software…how cool is that? Ok, sales pitch over. Let’s find some ways to reduce your shipping costs.

In this guide we will show you how to identify opportunities for shipping improvements by analyzing combined order and shipping data.

Quick Summary
  1. Reduce shipment weight
  2. Change or use multiple shipping methods
  3. Evaluate your 3rd party fulfilment center

1) Reduce shipment weight

This may sound obvious, but ecommerce stores often overlook finding ways to reduce packaging and shipment weight – especially orders that have multiple products in a shipment. Reducing weight for popular shipment combinations can drastically reduce overall shipping costs. For example, did you know USPS will automatically upgrade a shipment from ‘First Class’ to ‘Priority’ if the weight is over 16oz? USPS Priority has very similar service levels and delivery times to First Class, but costs 2-5x more! In this case, if you keep package weight under 16oz, you can realize significant savings. We often see ecommerce stores that have popular multi-product orders that end up slightly above the 16oz USPS First Class cutoff. With OrderMetrics.io you can eliminate this cost waste by identifying which orders this happens to and then reduce their packaging weight. Fedex ,UPS, and DHL use something called ‘dimensional weight’ to calculate a package’s weight. Please see each carrier’s respective guides to learn how to optimize packaging for these shipments.

You may be surprised at what other opportunities you can find if you combine order data with your shipping data and analyze the results. The ‘insights’ functionality of our software makes it easy to find common order combinations and see which shipping method they are sent. By identifying these orders, you can look into reducing packaging weight that would change the shipping method they are sent, thus significantly reducing costs.

View shipping cost breakdown by popular products 

2) Change or use multiple shipping carriers

All shipping carriers are not created equal and all orders deserve to be shipped via their optimal carrier. It is common for businesses to be content with their existing shipping carrier(s) and not identify orders which could be shipped more efficiently with a different provider. Using multiple shipping carriers for the right order combinations can offer bigly (or is it big-league?) cost savings. We recommend testing out multiple carriers for commonly ordered products/product combinations and identifying the method that meets your cost and delivery time needs.

For example, did you know that most Fedex Express shipments are routed through a sorting facility in Memphis, TN?- even if a shipment is being shipped from and to an address in California. Although these packages are guaranteed to arrive within 2 days, other methods such as Fedex Ground or USPS First Class can arrive within 1 or 2 days, depending on the shipment and delivery location, at a fraction of the cost!

Fedex express planes flying to their Memphish hub

Services such as Shippo are a great way to automatically calculate optimal shipping carriers on the checkout page. However, these services require pre-determined packaging dimensions and weights, which cannot always be predicted in advance. This is why it is important to look at post-shipment data and verify orders are being sent via their optimal carrier and shipping method. After identifying common product combinations and which shipping methods they are sent, you can make changes to what you charge the customer, change the shipping method you choose to send these orders, or make changes to product and shipment packaging. Our Shopify app helps you do this.

3) Evaluate your 3rd party fulfilment center

At Order Metrics, we have seen many companies who outsource their fulfilment and shipping operations to 3rd party warehouses such as ShipWire and Whiplash. 3rd party fulfilment centers can be a very convenient option for Shopify store owners, especially as they scale their business. However as convenient as 3rd party warehouses are, it is important to realize that you are at the mercy of their operations and their incentives are not always aligned with your business. For example, they do not have much incentive to optimize packaging weights and box sizes, which increase shipping costs. Additionally, if your shipping costs are billed directly by your fulfilment partner, they may upcharge you over the true shipment costs – even if they claim to be giving you ‘bulk volume’ discounted shipping rates. If they do bill you the actual rates, there can be shipping billing errors that may not be realized on your fulfilment partner’s bill. With that said, it is up to you to make sure orders are packaged efficiently and shipments are billed properly.

You may be saying “OK – I get why this is important, but what can I do?”

One solution is to use OrderMetrics.io to discover popular order combinations and ask your fulfilment partner to reduce weight or package dimensions that would allow those orders to be sent via a lower cost shipping method.

Another solution is to connect your Shopify and fulfilment/shipping data to OrderMetrics.io and email us to benchmark your fulfilment costs against similar businesses to yours. Additionally, our software will help you easily find billing mistakes. If your warehouse is hesitant or makes it difficult to get this data, you could ask to be billed directly by the shipping carrier and setup your own shipping accounts.

Additionally, you can always change your 3rd party fufillment service. We are happy to recommend fulfilment services that offer quality customer support, transparent billing, and high service levels.


Connect your Shopify store for a 14-day free trial

That is it for now. Part 2 is coming soon! We will discuss negotiating rates with Fedex, UPS, DHL, and USPS and requesting refunds for late shipments and billing errors which can reduce your bill by 5-10%. Enter your email below to be notified when it is completed.

Posted by Hank Kronick in OrderMetrics.io, 0 comments